Re Southern Equities Corporation Ltd (in liq); Bond & Caboche v England

BOND V ENGLAND

CABOCHE V ENGLAND

Full Court
Coram: Cox, Lander & Bleby JJ

Lander J

Introduction

These are separate appeals from decisions of a single Judge of this Court, in the one case where he dismissed an appeal from a Master of this Court who had refused to set aside a summons issued under s596B of the Corporations Law, and in the other case where the learned Judge himself refused to set aside a summons issued pursuant to s596B of Corporations Law (examination summons).

Orders were made for the urgent hearing of both appeals and for the hearing of both appeals together. Both appellants relied upon the same arguments except that Mr Bond presented one argument which was discrete to his appeal. I shall identify the arguments and the discrete argument later. These reasons, however, can be understood, except where I have indicated otherwise, as applying to the appeals of both appellants.

The respondent is the liquidator of Southern Equities Corporation Limited (In Liquidation) (SECL). He was appointed liquidator on 23 December 1993. Prior to its change of name on 30 November 1992 it was known as Bond Corporation Holdings Limited. In 1992 it entered into a scheme of arrangement, which was approved by the Supreme Court of Western Australia, with all of its creditors but defaulted in respect of that scheme of arrangement and in due course the respondent was appointed liquidator. SECL is the holding company and sole shareholder of Bond Corporation Pty Ltd (BCPL). On 5 February 1993 during the currency of the scheme of arrangement Mr Mark Hoffmann, a partner in the firm of Messrs Fisher Jeffries and William Trenear were appointed directors of BCPL as an aspect of the scheme of arrangement. Those two gentlemen have remained directors of BCPL since that time. BCPL is not, of course, in liquidation.

Dallhold Investments Pty Ltd (Dallhold) is a private company which was controlled by Mr Alan Bond but is now controlled by Mr Craig Bond, the son of Mr Alan Bond. Dallhold was the holding company of SECL, holding slightly more than half of the issued shares. However, its investment in SECL is now worthless.

Prior to the entry by SECL into the scheme of arrangement, Mr Alan Bond was also the chairman of directors of SECL. He is currently serving a term of imprisonment at Karnet Prison Farm in Western Australia in connection with offences relating to companies within the SECL Group. He was sentenced to imprisonment prior to December 1995. The appellant, Ms Caboche, was employed as the financial controller and company secretary of Dallhold. Ms Caboche is presently an employee of companies controlled by members of the family of Alan Bond.

The Legislation

Part 5.9 of the Corporations Law provides for the examination of persons about the affairs of corporations.

In particular s596B provides:

"(1)    The Court may summon a person for examination about a corporation’s examinable affairs if:
                  (a)     an eligible applicant applies for the summons; and
                  (b)     the Court is satisfied that the person:
(i)     has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or
(ii)     may be able to give information about examinable affairs of the corporation.

(2) This section has effect subject to section 596A."

The liquidator of SECL is an eligible applicant (s9).

Examinable affairs is also defined in s9 of the Corporations Law:

" ...‘examinable affairs’, in relation to a corporation means:
(a) the promotion, formation, management, administration or winding up of the corporation; or
(b) any other affairs of the corporation (including anything that is included in the corporation’s affairs because of section 53); or
(c) the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation’s examinable affairs because of paragraph (a) and (b);"

Misconduct is defined in s9 of the Corporations Law as follows:

" ...‘misconduct’ incudes fraud, negligence, default, breach of trust and breach of duty;"

There is no need to go to s53 of the Corporations Law because whilst it is not conceded that the appellants, Mr Bond and Ms Caboche, are persons who have taken part or been concerned in the examinable affairs of the corporation and may have been guilty of misconduct there is no argument that they are not persons who may be able to give information about examinable affairs of the corporation.

In those circumstances both Mr Bond and Ms Caboche are persons liable to be summoned for examination about the examinable affairs of SECL.

A liquidator who seeks to obtain an examination summons under s596B applies ex parte on summons or application to a Master of the Court. The application must be supported by an affidavit. Section 596C of the Corporations Law provides:

"(1) A person who applies under section 596B must file an affidavit that supports the application and complies with the rules.
(2) The affidavit is not available for inspection except so far as the Court orders."

That section is supported by r47 of the Supreme Court (Corporations) Rules 1993. It provides:

"An affidavit in support of a summons or an application seeking an order for the examination of any person under Section 596A or 596B of the Law may at the option of the applicant for the examination be sealed up before it is filed, and in that case it shall not be opened or inspected other than by direction of the Court."

It is only since the amendments to the Corporations Law assented to in December 1992 and which commenced in June 1993 that the Law has provided for a requirement that an affidavit be filed in support of the application, although prior to that time it was the practice, at least in this State, and I think in most jurisdictions, that any application for an examination summons was supported by an affidavit. For example the Rules of the Federal Court provided for an affidavit in support of an application for a summons under s596 (O71 r81). In any event there can now be no doubt that any application under s596B must be accompanied by an affidavit which supports the application and complies with the Supreme Court (Corporations) Rules 1993.

The affidavit, as s596C provides, is not available for inspection unless the Court orders. Prior to the amendments it was also the practice, at least in this State, that an affidavit in support of an examination summons would, as r47 presently provides, be sealed up and not be available for the inspection by the examinee or any other party. (That was also the practice in the Federal Court: O7, r81(4)).

Section 596D of the Corporations Law makes provision for the content of an examination summons. It provides:

"(1)    A summons to a person under section 596A or 596B is to require the person to attend before the Court:
                  (a)     at a specified place and at a specified time on a specified day, being a place, time and day that are reasonable in the circumstances; and
                  (b)     to be examined on oath about the corporation’s examinable affairs.

(2)     A summons to a person under section 596A or 596B may require the person to produce at the examination specified books that:
                  (a)     are in the person’s possession; and
                  (b)     relate to the corporation or to any of its examinable affairs.

(3) ..."

Rule 48 of the Supreme Court (Corporations) Rules 1993 provides:

"The order for an examination shall be in Form 10 and a sealed copy of the order shall constitute the summons to the examinee for his or her attendance at the examination."

The Rules provide for service of the order for examination. Rule 49 provides:

"An order for an examination shall be served personally upon the examinee or in such other manner as the Court shall direct within such time as the Court may direct, or if no direction is given at least 7 days before the date set for the examination."

Service of the order may be proved by affidavit (r51).

The examination is ordinarily to be held in public unless the Court considers that by reason of special circumstances it is desirable to hold the examination in private. (s597(4))

The Court is given powers to make directions in relation to matters such as the procedure to be followed at an examination; who may be present while it is being held in private; whether a person ought to be excluded even while it is being held in public; access to records of the examination; prohibiting publication or communication of information about the examination including questions asked and answers given at the examination and directions that a document that relates to an examination and was created at the examination be destroyed. (s596F)

A person who attends before the Court for examination must not, without reasonable excuse refuse or fail to take an oath or make an affirmation, or without reasonable excuse refuse or fail to answer a question, or make a statement that is false or misleading in a material particular or without reasonable excuse refuse or fail to produce books that the summons requires him or her to produce (s597(7)).

The Court is empowered to direct a person to produce at an examination of that or any person books that are in the first mentioned person’s possession and are relevant to matters to which the examination relates or will relate. [s597(9)] A person must not, without reasonable excuse, refuse or fail to comply with such a direction [s597(10A)].

Persons are not excused from answering questions in the examination on the ground that the answer might tend to incriminate that person or make the person liable to a penalty (s597(12)).

If a person claims that an answer might tend to incriminate that person or make the person liable to a penalty then that person is entitled, before answering the question at an examination, to make that claim and in those circumstances if, in fact, the answer might tend to incriminate the person or make the person liable to a penalty then the answer is not admissible in evidence against the person in a criminal proceeding or a proceeding for the imposition of a penalty (s597(12A)). However notwithstanding that claim the answer is still admissible in other proceedings apart from those referred to in s597(12A).

Subsections (13) and (14) of s597 provide:

"(13) The Court may order the questions put to a person and the answers given by him or her at an examination to be recorded in writing and may require him or her to sign that written record.

(14) Subject to subsection (12A), any written record of an examination so signed by a person, or any transcript of an examination of a person that is authenticated as provided by the rules, may be used in evidence in any legal proceedings against the person."

A similar provision contained in the Companies (South Australia) Code was considered by Perry J in Duke Group Limited v Arthur Young; Peat Marwick Hungerfords (1990) 54 SASR 498.

The Corporations Law further provides that any written record which is made under s597(13) is to be open for inspection without fee by the person who applied for the examination, or an officer of the Corporation or a creditor of the Corporation, and is to be open for inspection by anyone else on paying the prescribed fee (s597(14A)).

An examination may, if the Supreme Court directs, be held before such other court as specified by the Supreme Court and the powers of the Supreme Court may be exercised by that other court. (s597(15)).

The predecessor of s596 under the Companies (New South Wales) Code, which was in pari materia to the Companies (South Australian) Code was considered by the High Court in Hamilton v Oades (1989) 166 CLR 486. In considering the breadth of the section in so far as it related to criminal proceedings Mason CJ said at 496:

"There are the two important public purposes that the examination is designed to serve. One is to enable the liquidator to gather information which will assist him in the winding up; that involves protecting the interest of creditors. The other is to enable evidence and information to be obtained to support the bringing of criminal charges in connection with the company’s affairs; Mortimer v Brown (1970) 122 CLR 496 at 499. Subsection (2) (a) and (b) emphasises the high public importance of these purposes. The examination is designed to elicit, among other things, evidence and information relating to the question whether the witness ‘has been or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to’ the Corporation."

The purpose of s597, the immediate predecessor of s596B, was considered by the Full Court of the Federal Court in relation to civil proceedings in Re Compass Airlines Pty Ltd (1992) 109 ALR 119. Lockhart J said at 129:

"...the purpose of the investigation is to ascertain material relevant to the specific company concerned and its affairs. It is of course like all such sections a public interest provision to some degree, but essentially it is concerned with obtaining information and documents with respect to the affairs of a particular company."

In Re Excel Finance Corporation Ltd; Worthley v England (1994) 52 FCR 69 the Full Court of the Federal Court, (Gummow, Hill and Cooper JJ), considered the scope and purpose of s597 in the context of an examination by a receiver and concluded at 86:

"The purpose of an examination, in a case such as the present, is to gather information in relation to, inter alia, the management administration or otherwise the affairs of the corporation to determine the assets of the corporation which may be available for distribution to creditors and the location of those assets and, more particularly, to determine whether assets may be recovered by the corporation for the benefit of creditors arising out of transactions which may have involved fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to the corporation."

In Grosvenor Hill (Qld) Pty Ltd v Barber & Anor (1994) 12 ACLC 176 the Full Court of the Federal Court in considering the purpose and effect of s596B said at 179:

"The effect of the legislation is to place a liquidator in a privileged position to obtain information relevant to and necessary for the proper discharge of his or her statutory function. The seeking of information to make decisions as to whether or not litigation ought to be embarked upon or continued in itself is no more than ‘an exercise of his duties and fulfilment of his responsibilities as a liquidator’ (per Bryson J. in Lombard Nash International Pty Ltd v Berentsen & Ors (1990) 8 ACLC 1,213 at 1,217)."

In short, s596B places the liquidator in a privileged position for the purpose of providing the liquidator with sufficient powers to obtain information by obtaining books and documents or by inquiring orally of persons who may be able to give information about the examinable affairs of the corporation. The legislative scheme ensures that the liquidator is given power to obtain as much information as possible to assist with the winding up so as to determine the assets of the corporation and the recoverability of those assets, particularly in relation to transactions which may have involved misconduct of some kind.

The Applications

On 7 December 1995 the respondent liquidator applied for orders pursuant to s596B of the Corporations Law that the appellants, Mr Bond and Ms Caboche and other persons attend before this Court for examination. That application was supported by an affidavit of the liquidator sworn on 7 December 1995. Consistent with s596C, and the practice of the Court, that affidavit was sealed before it was filed and after it was read by the Master on the application for the examination summonses, it was resealed.

A number of orders were made.

In the Master’s reasons in relation to an application to set aside an examination summons directed to another examinee the Master recited the history of the matter in its early stages. Those reasons were exhibited to an affidavit of Mr Karas, a solicitor employed by Messrs Fisher Jeffries, solicitors for the liquidator. The Master said:

"By an application dated 7 December 1995, the Liquidator sought orders for the examination of and production of documents by some eleven people, and production of documents by various organisations to which they belonged. The application was supported by an affidavit of the Liquidator, which set out in detail approaches which had been made to the Liquidator, with regard to certain artworks which, it was thought, may have been, at some stage, have been assets of SECL or one of its subsidiaries or associated companies. The affidavit went on to indicate the results of the Liquidator’s investigations from the books and records of the company, which were in his possession at the time. It is clear that the result of the Liquidator’s investigations suggests that there may be substantial assets of the company which are no longer in the possession of the company. The affidavit goes on to outline the further inquiries which the Liquidator considers should be made and the reasons for this.

The affidavit also sets out the basis of apprehension on the part of the Liquidator that, if the strictest confidentiality is not maintained, the assets which he seeks to obtain may be placed further out of his reach.

The affidavit, in effect, explains that the various applications contained within the one application are a package designed to, if possible, locate or, alternatively trace, as far as possible, substantial assets of the company, which are no longer available to the Liquidator. In his affidavit, the Liquidator identifies all sources of the background information upon which he relies. For reasons which will become apparent, I mention at this stage that there is no reference to information provided by or through the Federal Police."

When the appeal in relation to Ms Caboche, and the application in relation to Mr Bond came before the learned Judge from whom these appeals are brought, in response to an invitation from Mr Callinan QC, who then appeared for Ms Caboche, His Honour unsealed that affidavit for the purpose of determining whether there had been a material non disclosure and ascertaining the purpose for which the examination summons was sought.

I shall deal with the matter of material non disclosure later but His Honour recorded in his reasons for dismissing the appeal of Ms Caboche that that affidavit showed:

"...that the liquidator asserted his belief that SECL may be entitled to institute proceedings to recover any loss occasioned by the dealings in the paintings and that he seeks his examination to assess the prospects of success."

The Orders of 8 December 1995

As the Master’s reasons show a number of orders were made on 8 December 1995.

In relation to Mr Bond an order was made for his examination and requiring his attendance on 26 February 1996. The order directed to Mr Alan Bond is not included in the appeal papers.

In relation to Ms Caboche an order was made for her examination and further requiring her attendance on 19 February 1996 and requiring her to produce to the chambers of the Master by 16 February 1996 all books, papers, deeds, writings and other documents in her possession, custody or power in any way relating to the examinable affairs of SECL. The order also required Hullmes Pty Ltd (Hullmes) to deliver up all books, papers, deeds, writings and other documents in its possession, custody or power in relation to the examinable affairs of SECL by the same date, viz 16 February 1996. The order further provided that neither Ms Caboche nor Hullmes Pty Ltd disclose the order to any person other than their legal adviser.

In any event neither of the orders were served on either Mr Alan Bond or Ms Caboche. Although orders were made for the examination of other persons, no examination of any of the other proposed examinees took place before 2 January 1996.

The examinations were for the purpose, so the Master recorded, of ascertaining the whereabouts of particular artworks being, it was said, assets of SECL. The liquidator was apparently aware in December of 1995 that there had been a purported sale of artworks at a claimed gross under value which was apparently consummated on or about 2 January 1990. The liquidator was concerned in December 1995 that the Limitations of Actions Act would operate to bar any proceedings not commenced by 2 January 1996.

The learned Judge found that on 7 December 1995 the liquidator intended to institute proceedings seeking declarations and damages for breaches of fiduciary and statutory duties and arising out of other causes of action against a number of parties including these appellants. He made that finding after hearing the evidence of the liquidator’s solicitor, Mr Hoffmann and after a consideration of the sealed affidavit sworn on 7 December 1995. It has not been suggested in these appeals that that finding was wrong and, in my opinion, it would be appropriate to proceed upon the basis of that finding and I do so.

The Substantive Proceedings Of 2 January 1996 - Action No. 113 of 1996

Proceedings were issued against these appellants and others on 2 January 1996. At the time the proceedings were issued, upon the application of the liquidator, the same Judge made an order that the fact of the issue of proceedings be kept confidential. The liquidator sought and obtained that order upon the basis that the issue of the proceedings could prejudice his conduct of the examinations which had been set for early 1996.

Rule 10.03 of the Supreme Court Rules provides that a summons shall be in force for a period of three months from the date of its issue but it may be renewed for a further period by order of the Court. In those circumstances the proceedings issued on 2 January 1996 needed to be served unless the summons was renewed by 2 April 1996.

The circumstances giving rise to the issue of the proceedings were described by Mr Hoffmann in an affidavit in the following terms:

"I was instructed by the Liquidator to file the summons and statement of claim in Action No. 113 of 1996 on 2 January 1996 as a ‘protective writ’ in view of the possible effluxion of the statutory limitation period in respect of causes of action which appeared to be potential assets of SECL which the Liquidator considered should be preserved and further investigated."

The appellants assert that the proceedings which were ultimately served upon them, albeit very much later, demonstrate that the liquidator was in full possession of the facts and circumstances of the impugned transactions as at 2 January 1996, and the proceedings themselves demonstrate that the applications for the examinations summonses were motivated by an improper purpose. I will return to that submission but in the meantime I shall deal with the proceedings.

The statement of claim, which has been amended in circumstances which I will later consider, is exhibited in these proceedings. It would be appropriate at this stage to consider the statement of claim in its form prior to amendment.

The proceedings were issued on 2 January 1996 by two plaintiffs, SECL and BCPL. It is pleaded that SECL was the ultimate holding company of a multinational conglomerate known as the Bond Group comprising approximately 700 subsidiaries incorporated in over 25 foreign jurisdictions. It is alleged that BCPL was and is a wholly owned direct subsidiary of SECL which had provided administrative and financial services to the SECL group. It is also pleaded that its accounts were consolidated with those of SECL for the purpose of the preparation of the SECL group accounts.

The defendants were identified as Mr Alan Bond, who is described as the executive director and chairman of SECL, and an executive officer of SECL and formerly a director and officer of BCPL and a director and executive officer of Dallhold over which he had control; the Estate of Peter Beckwith, who before his death was an executive director and managing director of SECL and a director and executive officer of BCPL; Mr George Way, who was a director and major shareholder of Sundeed Holdings Pty Ltd (Sundeed), a company carrying on business under the name "High St Gallery"; Mr Gregory Way, the son of George Way who was also a director and shareholder of Sundeed; Tambar Pty Ltd (Tambar) a company under the control of Mr Craig Bond, a son of Mr Alan Bond and a director of Dallhold and Hullmes, who is also a director of that company; Mr Craig Bond himself; Mr Wayne Zekulich, who is a director and secretary of Tambar; Hullmes, the directors of which were Mr Alan Bond, Ms Caboche and another person and which it was claimed was controlled by Alan Bond; Ms Caboche, a director and secretary of Dallhold and Hullmes and the financial controller of Dallhold and the Dallhold Group; and Nevill Keating Pictures Ltd and the two directors of that business which provided services in respect of artworks to Alan Bond and others.

The proceedings claim that the plaintiffs and other entities within the SECL group and Dallhold were the owners and or lessees of an extensive collection of artworks which had been collected at the direction and under the supervision of Mr Alan Bond during the period between 1983 and 1991.

It was claimed that as at 2 January 1990 the market value of the SECL artworks was in the order of AUD $22,104,000 (para 51).

The statement of claim asserts that by no later than 18 December 1989, Alan Bond entered into a transaction with a Mr George Way, acting on behalf of himself, Craig Bond, Tambar and other interests related to those parties agreeing between themselves and with Mr Way and a company associated with Mr Way that Mr Way and that company would act as a "front" to disguise the acquisition of the SECL artworks by or on behalf of Craig Bond, Tambar and other related interests. It is pleaded that the transaction allowed those parties to acquire the SECL artworks at a gross under valuation.

The transaction, it is claimed, was evidenced by letter dated 18 December 1989 from George Way to Mr Beckwith of SECL which was sent by George Way at the request of Alan Bond offering to purchase the SECL artworks for $922,500. At the same time Mr George Way wrote to Mr Craig Bond of Tambar to confirm that Tambar agreed to lend the sum of $922,500 "to finance our purchase of the artworks referred to in the attached Schedule (the "Artworks").

It is pleaded that the letter continued:

"It is hereby agreed that the loan from Tambar shall be interest free and will be repayable on demand. It is further agreed that on forgiveness of our A$922,500 debt to Tambar, the payment to the High Street Gallery of an A$50,000 fee and the reimbursement of our expenses associated with the Artworks, the Artworks are to be transferred to Tambar."

It is claimed that the whole transaction was a sham whereby the loan referred to in that letter would be collapsed and forgiven and, as a result of which, Tambar and parties associated with Mr Alan Bond would become the owners of the SECL artworks for a payment of $922,500. It is claimed that that result represented an acquisition at a significant under valuation of the assets.

The statement of claim identifies with considerable particularity the transaction in its substance and the manner in which it was carried out. It identifies, in detail, the way in which payment was said to be made, the dealing with the assets subsequent to the acquisition by Tambar and those associated with Mr Alan Bond and the claimed breaches on the part of each of the defendants in relation to their duties owed to the plaintiffs. It is not necessary for the purpose of these reasons to do more than acknowledge the force of the submission made by the appellants that by 2 January 1996 the liquidator was in possession of considerable detail in relation to the impugned transactions.

The Attendance Before The Master On 22 January 1996

On 22 January 1996 Mr Jason Karas informed the Master that proceedings had been issued on 2 January 1996 and that the Judge had made an order for confidentiality.

In the proceedings before the learned Judge, Mr Karas identified a file note which had been prepared at or about the time of the attendance before the Master:

"Proceedings issued

- on 2.1.
- Debelle J made confid order."

In an affidavit filed in these proceedings Mr Karas said:

"12. By reference to the date of the hearing, I verily believe the primary purpose of the attendance on 22 January 1996 was to vary the terms of an Order in another confidential matter in this investigation. My note discloses that I then reported on the status of a number of other matters which were at that time pending in the SECL administration. Until I identified the note, I had no conscious recollection of the hearing on 22 January 1996.

By reference to item 3 in my note, I verily believe that I informed Judge Bowen Pain on 22 January 1996 that substantive proceedings (being Action Number 113 of 1996) had been filed on 2 January 1996 and that the Honourable Justice Debelle had made orders as to the confidentiality of those proceedings on that day. Having now thoroughly reviewed the matter, I verily believe this was the first available opportunity to disclose the existence of Action Number 113 of 1996 to the Master as the Master had been on annual leave until 22 January 1996. Upon reviewing my note and the surrounding circumstances, it is apparent to me that I took this opportunity to appraise the Master of developments in the winding up in his capacity as the Judicial Officer supervising the conduct of the winding up of SECL."

It is not clear that that disclosure was made whilst the Master was exercising judicial power or whether it was made to him whilst he was acting in some administrative capacity. The extent of the disclosure is also not clear from the file note or from Mr Karas’ affidavit

The Order Of 19 February 1996 To Ms Caboche

On 19 February 1996, an order was made by the Master for the examination of Ms Caboche and summoning her to attend before the Court on 25 March 1996. That order did not require her to produce any documents nor did it direct Hullmes to produce any documents. The order which was made on 19 February 1996 was said to be made upon the application of 7 December 1995 and the affidavit filed in support of that application.

The Attendance Before The Master On 21 February 1996

On 21 February 1996, a partner in the firm of Fisher Jeffries, Mr Hoffmann, who was accompanied by Mr Karas, reported to the Master on the status of the liquidator’s investigation. He said in an affidavit tendered in both these proceedings:

"24. On 21 February 1996, I attended before Judge Bowen Pain with Jason Karas to report to this Honourable Court on the status of the Liquidator’s investigation. At this time, I informed Judge Bowen Pain that a ‘protective writ’ had been filed by SECL and BCPL naming at that stage each of the parties that had had any involvement in the transaction the subject of the Liquidator’s investigation for the purpose of protecting potential causes of action prior to the possible expiry of a limitation period. I informed Judge Bowen Pain of each of the parties then named as defendants (including Ms Caboche) in the summons and in broad terms the nature of the allegations made and relief sought."

A file note from Mr Hoffmann’s file was also tendered which was in the following terms:

"Re subs proceedings:

-       could extend summons
         -       carries baggage as once AFP warrants executed, risk to painting.
         -       seek Mareva relief + L of R, that UK not to make Mareva inj + ... relief."

The note on the face of it does not indicate disclosure of the matters referred to in Mr Hoffmann’s affidavit but it was not argued on this appeal that Mr Hoffmann’s affidavit ought not to be accepted.

It is not clear from Mr Hoffmann’s note or from the affidavit whether the disclosure made by Mr Hoffmann to the Master in the presence of Mr Karas was made in circumstances where the Judge was exercising judicial power. It appears more likely that the information was provided to him when he was being informed of administrative matters relating to the liquidation as a whole.

However, no complaint was made by the appellants of the circumstances in which the disclosure was made by either Mr Karas on 22 January or Mr Hoffmann on 21 February and in particular it was not argued that disclosure was made in circumstances when the Master was not sitting as a Master of the Court.

The Order Of 18 March 1996 To Ms Caboche

It appears that the order of 19 February 1996 was also not served because the Master made a further order directed to Ms Caboche on 18 March 1996. On that day he again made an order for the examination of Ms Caboche upon the application dated 7 December 1995 and upon the affidavit filed in support of that application. On this occasion the order provided that the examination was to take place on 1 April 1996. Except for the date of the examination the order was in precisely the same terms as the order of 19 February 1996. The order was served on Ms Caboche on 20 March 1996 in Western Australia.

The Examination Of Ms Caboche On 1 April 1996

On 1 April 1996 Ms Caboche attended in response to the examination summons of 18 March 1996 represented by Mr Fraser, a solicitor in the Melbourne firm of Galbally Fraser and Rolfe. Mr Fraser applied for the adjournment of the examination upon the grounds:

"...that this forum has been improperly convened and improperly convened for an improper purpose.

We will be seeking to take out proceedings for an order to that effect and on that basis we ask for the adjournment again."

The use of the word ‘again’ refers to an application for the adjournment of the examination of another person.

The Master refused the application and the examination proceeded. During that examination which proceeded from 11.10 am to 1.10 pm, Ms Caboche answered questions which were put to her by Mr Hoffmann on behalf of the liquidator, in most cases claiming privilege against self incrimination under s597A (12A).

The transcript discloses that the examination was adjourned sine die.

No application was made by Ms Caboche, at least at that time, to set aside the examination summons or for any other relief. The examination which was conducted on 1 April 1996 related to the matters the subject of the substantive proceedings. It is important to note that Ms Caboche does not claim that there was anything in the conduct of the examination itself which could give rise to a suggestion that the examination was being conducted for an improper purpose. She does not claim that the examination itself discloses that the liquidator was using the procedures available under s596B for an improper purpose. She does not complain that that examination demonstrated a rehearsal of cross examination or indicated a use of the procedure which was in any way oppressive. In due course I shall come to her submission that this order was obtained for an improper purpose which for reasons which will become apparent I reject. What is important, however, is that if this examination was conducted for an improper purpose one would have thought the examination itself would demonstrate or at least support the submission.

The Renewal Of The Summons In Action No. 113 Of 1996

On each of 27 March 1996, 29 May 1996, 17 September 1996, 29 November 1996 and 21 February 1997 the summons in the substantive proceedings Action No. 113/96 was renewed and on the last occasion until 6 May 1997.

Between 2 January 1996 and the last mentioned date a number of examinations of persons, apart from these appellants, took place.

The Orders Of 24 April 1997

On 24 April 1997 orders were made in respect of both appellants. In relation to Ms Caboche, an order was made upon an application dated 24 April 1997 and apparently upon an affidavit filed in support, that the examination of Ms Caboche, pursuant to the order of the Court made on 18 March 1996, be resumed on Friday 16 May 1997 and thereafter on Monday 2 June 1997. As previously ordered it was provided that the examination be held in private.

The order also required production at the resumed examination on Friday 16 May 1997, by Ms Caboche, Tambar and Hullmes of all of the documents set out in the schedule to the order.

The order enjoined Ms Caboche, Tambar and Hullmes from disclosing the existence of the order to any other person other than their legal advisers and the legal advisers from disclosing the existence of the order to any other person.

On the same day upon an application dated 24 April 1997, and again apparently upon an affidavit filed in the Court, an order was made directed to Mr Alan Bond. The order provided for the examination of Mr Bond and then relevantly provided:

That the said Alan Bond is hereby summoned to attend before the Court at Karnet Prison Farm, Kingsbury Drive, Serpentine in the State of Western Australia on Thursday 22 May 1997 at 10 am to be examined on oath in respect of the examinable affairs of the above named company.

That this Court sit outside the State and in Western Australia for the purpose of hearing the examination of the said Alan Bond.
That to the extent necessary the applicant may serve this order out of the jurisdiction."

Other orders were made in relation to confidentiality which are not materially different to the previous orders to which I have referred.

On 28 April 1997, Messrs Fisher Jeffries served by letter a copy of the order of 24 April 1997 on Mr Deans McClue, the superintendent of the Karnet Prison Farm.

The letter also sought Mr McClue’s co-operation in the conducting of the operation at the Karnet Prison Farm on 22 May 1997. The fact that co-operation was forthcoming indicates, of course, receipt of the letter and order of 24 April 1997. Indeed on 30 April 1997, the Executive Director, (Offender Management) of the Ministry of Justice in Western Australia wrote to Messrs Fisher Jeffries advising them that he had received the facsimile letter of 28 April 1997 addressed to the Superintendent of Karnet Prison Farm. He confirmed that the Ministry was prepared to make a room available and "would permit Mr Bond to attend".

On 29 April 1997, Mr Alan Bond was served with the order of 24 April 1997. Mr Bond provided the order to his solicitors on 1 May 1997. So much was acknowledged by Mr Howard QC, senior counsel for Mr Bond, in a subsequent hearing before Heenan J.

Amendment Of The Substantive Proceedings Action No. 113 Of 1996

On the same day the plaintiffs in the substantive proceedings were granted leave to amend those proceedings and on 2 May 1997 the summons was amended accordingly to include Richard Anthony Fountayne England, as liquidator of Southern Equities Corporation Limited (In Liq), as a plaintiff.

On 5 May 1997, pursuant to r53 of the Supreme Court Rules, the statement of claim was amended and, on the same day the summons and statement of claim as amended were served on the appellants. Service was effected the day before the summons would have become stale.

Ms Caboche’s Reaction To The Order Of 24 April 1997

On 5 May 1997 Messrs Galbally Fraser and Rolfe, solicitors for Ms Caboche, wrote to Mr Hoffmann of Fisher Jeffries. In that letter they advised Mr Hoffmann that their client was due to depart for Canada the next day, the 6 May 1997, and not expected to return until 26 May 1997. The letter continued:

"It follows from the foregoing that our client will be available for the 2nd of June but will not be in a position to provide the documentation by the 16th of May . We are further instructed however that all documentation will be produced as requested to you prior to the 2nd of June and as soon after her return to Australia as is practicable.

Would you please confirm that this is acceptable to you."

It is to be noted that notwithstanding Mr Fraser’s indication on a previous occasion (1 April 1996) that Ms Caboche would make an application to set aside the examination summons, no application had been made to that point of time and there was no reference in this correspondence to such a course of action. On the contrary the correspondence suggests co-operation with the liquidator.

On 6 May 1997, Messrs Fisher Jeffries responded to that letter. I set out the relevant parts of the response:

"On 29 April 1997, Ms Caboche telephoned our Mr Hoffmann at which time she informed him of her impending departure and requested that she be excused from attending on 16 May 1997.

Mr Hoffmann informed Ms Caboche that the Liquidator would agree to Ms Caboche being excused from attending on 16 May 1997 provided she produced documents to the Court before that day and attended for examination on 2 June 1997.

Mr Hoffmann clearly stated that the Liquidator’s consent to Ms Caboche’s non-attendance on 16 May 1997 was conditional upon her agreement to producing documents before that date.

Despite this, you now advise that Ms Caboche does not propose to produce documents until after her return on 26 May 1997. This is unacceptable to the Liquidator.

As the Order for production is addressed to each of Ms Caboche, Tambar Pty Ltd and Hullmes Pty Ltd, we trust there is another officer of Tambar Pty Ltd and Hullmes Pty Ltd who can attend to the production exercise.

Please confirm by return facsimile that the documents will be produced by 16 May 1997. In the event that we do not receive such confirmation, Mr Caboche’s (sic) attendance will be required on 16 May 1997."

On 14 May Fisher Jeffries wrote again to the solicitors acting for Ms Caboche:

"We refer to your letter dated 5 May 1997 and to our letter dated 6 May 1997.

In our letter dated 6 May 1997, we requested that you advise us by return facsimile whether the documents required to be produced by Ms Caboche, Tambar Pty Ltd and Hullmes Pty Ltd pursuant to the Order made on 24 April 1997 would be produced by 16 May 1997 and that if we did not receive such confirmation, Ms Caboche’s attendance would be required on 16 May 1997.

We note that we have not yet received your reply.

Please let us know by return facsimile forthwith:

whether the documents required to be produced pursuant to the Order of 24 April 1997 will be produced by 16 May 1997;

whether Ms Caboche will be attending at 2.15 pm on Friday; 16 May 1997."

They received an abrupt reply by letter dated 15 May 1997 from Messrs Galbally Fraser and Rolfe:

"We acknowledge receipt of your letter dated 14 May 1997 and refer to our letter dated 5 May 1997 and confirm that Ms Caboche is presently overseas and is returning on 26 May 1997. Further we confirm our instructions as outlined in our letter to you of 5 May 1997. In answer to your questions:

The documents required will not be produced by 16 May 1997.

Ms Caboche will not be attending at 2.15 pm on Friday 16 May 1997."

The failure of Ms Caboche to attend in response to the order may have amounted to a breach of s597(6) and the failure to respond by producing the documents may have amounted to a breach of s597(10A).

It is to be noted that no application was made to this point in time to set aside the examination summons. Indeed Ms Caboche’s solicitors indicated she would attend. It would be reasonable to infer from the correspondence emanating from Ms Caboche’s solicitors that Ms Caboche intended to submit herself to further examination.

Mr Bond’s Reaction To The Order Of 24 April 1997

On 21 May 1997, the eve of the day appointed for Mr Bond’s examination, Messrs Galbally Fraser and Rolfe wrote to Messrs Fisher Jeffries in connection with the proposed examination of Mr Alan Bond in the following terms:

"Our client has expressed concerns as to the power the court is exercising to compel his attendance at tomorrow’s hearing. Please advise by what power - (1) the court sits in Western Australia; (2) the Court sits in a prison within Western Australia, as opposed to some other non custodial venue; (3) by which Mr Bond’s presence is compelled from his cell to the place where the hearing is to be conducted within the prison.

We look forward to your urgent reply."

Messrs Fisher Jeffries responded to that letter later that afternoon in the following terms:

"We refer to your letter dated 21 May 1997. Although not obliged to do so, for your assistance we refer you to section 45(2) of the Supreme Court Act 1935, which states that the Court may sit at any place either within or outside the State."

The Hearing At Karnet Prison Farm

The Master attended at Karnet Prison Farm in Western Australia on 22 May 1997 for the purpose of the examination of Mr Alan Bond pursuant to the order made on 24 April 1997. The hearing took place in the office of the Superintendent of the Prison Farm

At that time Mr Alan Bond was represented by senior counsel, Mr Howard and junior counsel, Mr Andrew Harris.

Objection was taken to the competence of the Master to require Mr Bond to submit himself for examination. Mr Howard made a number of points during the hearing before the Master. Whilst he accepted that the South Australian Supreme Court could sit outside South Australia pursuant to s45(2) of the Supreme Court Act 1935 or s59E of the Evidence Act the Court could not, he argued, exercise any ancillary powers such as administer an oath or commit for contempt. He also argued that there was no power reposing in the Master to order that Mr Bond be brought up from his cell to the superintendent’s office, where the hearing was to take place.

In response to the submission that the Master lacked power to administer an oath Mr Whitington QC, who appeared for the liquidator, advised that his client would find an appropriate person empowered under the law of the jurisdiction to administer an oath and, if that was not possible, they would proceed in any event to put questions to Mr Bond and seek his responses whether they be on oath or not.

In answer to the submission that the Master lacked power to order that Mr Bond be brought up from the cell, Mr Whitington argued that there was power under s22 of the Prisons Act 1981 of (WA) which allowed a Judge or Master of the Supreme Court, a District Court Judge or a Family Court Judge or a Judge of any other court, a Magistrate, two Justices, the Chief Executive Officer or the Superintendent of the prison in which the prisoner is confined to order in writing and direct that the prisoner be brought up to the place named in the order for the purpose of any "judicial proceedings".

He told the Master that, in view of the objection taken, the liquidator proposed to follow that procedure and proposed to seek to have the Chief Executive Officer or the Superintendent of the prison make the appropriate direction in writing. He also said that out of an abundance of caution contact would be made with the Chief Justice of Western Australia to call in aid his powers. He asked the Master to adjourn for a short period so all that could be done.

In reply to those submissions and in relation to the suggestion that the liquidator could obtain a "bring up" order Mr Howard argued that such an order could not be made because an examination under s596B of the Corporations Law was not a judicial proceeding but in fact an inquiry into the affairs of SECL.

The Master considered the submissions made and concluded that he was entitled to sit and administer an oath. He determined that there was nothing that precluded him from conducting the examination save for the procedural impediment arising because of the location in which the examination was to be held. He indicated that he would proceed to examine Mr Bond on his oath if an order could be obtained under the Prisons Act 1981 of (WA). He adjourned to allow the liquidator to obtain such an order.

Immediately thereafter application was made by telephone to Heenan J of the Supreme Court of Western Australia seeking a "bring up" order under s22. That application was opposed by Mr Howard.

After hearing lengthy argument from counsel Heenan J made the following orders:

This application be adjourned until further order upon the following conditions, namely:

(i) written submissions be provided by Alan Bond or on behalf of Alan Bond within seven days hereof;

(ii) written submissions be provided by the liquidator within three days of receiving the submissions already referred to;

(iii) that Alan Bond be at liberty to provide submissions in reply within 48 hours of receiving the liquidator’s submissions;

(iv) there be liberty to apply in relation to the making of oral submissions."

His Honour indicated during argument that having regard to the matters raised it was not possible for him, to give a decision ex tempore. without reading the authorities which were cited to him.

The Master, after being advised of the proceedings before Heenan J said:

"It is my intention to adjourn this matter to a place and time to be determined, because in the light of some of the submissions that have been put, I think we could still end up with a farcical situation if I simply adjourn the examination at this place. I propose to, as I say, adjourn it to a time and place to be fixed. I will list it for mention at a time when Heenan J might be anticipated to have to delivered his reasons."

After the Master indicated what he proposed to do, Mr Howard said

"In fairness I should mention to you that in the course of our discussion on the phone with Heenan J I foreshadowed that we would make a challenge to the ruling that you have made on the question of jurisdiction as to compulsion and the oath. I am mentioning that because it was a factor that was disclosed between the parties in that conversation."

At the conclusion of the hearing the Master said:

"Perhaps I should also indicate that I, on behalf of the Supreme Court of South Australia, may well make some decision myself and it may well be before 23 June. I will obviously try not to do anything in the week before that, so that Mr Harris is at least available. But I accept that we’ve got to respect the individual’s rights and obligations, but the court can only go so far and when the court starts being put to a disadvantage, then the court’s got to look after its own interests. For instance, I’m scheduled to sit in civil for the second half of this year and I’ve already made it quite clear that I won’t be available to unless I’m specially released by the Chief Justice to deal with any of these matters. So that’s one of the things that I’ll have to bear in mind myself. But that’s not an application on behalf of the liquidator. That’s a matter that I’m putting on behalf of the court. Thank you."

The formal orders of the Court were:

Adjourn the examination of Alan Bond to a place and time to be fixed.

Reserve the question of costs thrown away as a result of today.

Adjourn the matter for mention only on 23 June 1997 at 9.00 am."

At no time before or at the hearing before the Master at Karnet Prison Farm did Mr Bond through his counsel advise the Court that any challenge would be made to the order for his examination of 24 April 1997. It is to be remembered that Mr Bond had been "served" with that order on 29 April 1997 and with the summons and statement of claim in Action No. 113 of 1996 on 5 May 1997. No suggestion was made that the order of 24 April 1997 ought to be set aside upon the ground that it was obtained for an improper purpose or that it was otherwise an abuse of process, by reason of non disclosure or otherwise.

It is also to be noted that at that hearing Mr Bond appeared by senior and junior counsel. No objection was taken to the service of the order of 24 April 1997. There was no complaint that service was defective.

The Order Of 26 May 1997 Directed To Mr Bond

On 26 May 1997 the Master called on the matter for further hearing. He described the events of that hearing in a letter of 30 May 1997 to Heenan J, (a copy of which was provided to the solicitors for the parties):

"I reflected on the matter and sought some advice. I then called on the matter on Monday 26 May 1997. I advised counsel that, having reflected on the matter, I had resolved to conduct the examination in Adelaide. Mr Whitington QC, for the Liquidator, made oral application for an order pursuant to s39 of the Service and Execution of Process Act. I considered the application and made an order on 27th May 1997."

The Master does not explain the first sentence of that letter to Heenan J. However no complaint was made in this appeal or before the Judge at first instance in relation to His Honour having sought some advice.

On 26 May 1997, the Master made further orders. Relevantly he ordered:

That the Orders made on the 24th day of April 1997 be varied by deleting paragraph 5 thereof.

That the adjourned examination of ALAN BOND pursuant to the Order of this Honourable Court made on the 24th day of April 1997 take place at 9.30am on Tuesday the 1st day of July 1997 at which time ALAN BOND is required to attend before this Court at Sir Samuel Way Building, Victoria Square, Adelaide in the State of South Australia for further examination and thereafter until such examination has been completed."

Again it is important to note that although Mr Bond had been served with the examination summons on 29 April 1997, no complaint was made in relation to the service of that order and summons. There was no suggestion made to the Master that the examination summons raised a question of improper purpose or was defective for some or any other reason. There was no suggestion that Mr Bond would attempt to set aside the examination order under r50 of the Supreme Court (Corporations) Rules 1993. Indeed by this time the time for setting aside that summons had well passed.

It was argued on this appeal that no criticism ought to be levelled at Mr Bond for exercising any rights which he might have under the Corporations Law to avoid being examined under Pt5.9. I think that is right. I think any examinee is entitled to insist upon compliance with both substance and form by anyone who claims to be entitled to conduct an examination under that part. I think the section is so far reaching in its terms that an examinee ought not to be criticised for requiring that the proposed examiner comply in all respects with the law. I do not level any criticism at all at either of the appellants in insisting upon a strict compliance with both substance and form.

However, that does not mean that the way they have gone about their objection cannot be criticised. It cannot be overlooked, because both of them required an indulgence of the Court in relation to the lateness of the applications for setting aside the summonses, that both appellants took a number of objections to various aspects of these proceedings before they settled upon the matters which are the subject of these appeals. Those matters are not unimportant in a consideration of whether or not the appellants or either of them were entitled to an extension of time within which to make the applications to set aside the examination summons. I will return to that matter.

The Order Of 27 May 1997 Under The Service And Execution Of Process Act

On the following day, 27 May 1997, the Master made further orders:

That pursuant to Section 39(1) of the Service and Execution Process Act 1992 ALAN BOND of Karnet Prison Farm, Kingsbury Drive, Serpentine, in the State of Western Australia be produced at Sir Samuel Way Building, Victoria Square, Adelaide in the State of South Australia on Tuesday the 1st day of July 1997 at 9.30am.

That this Order be addressed to GARY BYRON of Ministry of Justice, Level 16, Westralia Square, St Georges Terrace, Perth in the State of Western Australia in his capacity as Custodian of ALAN BOND."

The Conclusion Of The Proceedings Before Heenan J

Following upon the making of those orders counsel for the liquidator and Mr Bond wrote jointly to Heenan J on 29 May 1997. They advised His Honour of the orders made on 26 May 1997 and 27 May 1997. Further they advised His Honour that Mr Bond indicated that he proposed to challenge the orders. The letter concluded:

"The parties now wish that the application made to His Honour under section 22 of the Prisons Act (Western Australia) for a bring up order be adjourned for further consideration at a later date should that be necessary with liberty to apply.

The position is that the liquidator is not presently disposed to discontinue and both parties currently wish that nothing further be done in the application.

We would therefore ask that his Honour make an order accordingly by consent. If his Honour would like to hear from the parties we should be pleased to attend before him by telephone link."

In his letter of 30 May 1997 to Heenan J the Master advised of the events which had transpired since the application by telephone to Heenan J on 22 May 1997, and concluded by advising Heenan J that the application which had been raised before Heenan J was now "redundant".

The Service Of The Orders Of 26 May 1997 And 27 May 1997

The orders of 26 May 1997 and 27 May 1997 were served on Mr Bond on 1 June 1997. At the same time he was served with a Notice to Witness under the Service and Execution of Process Act 1992.

The question of whether or not proper service had ever been effected on Mr Alan Bond became a live issue in this appeal. In due course the respondent tendered an affidavit of Jason Karas with a number of exhibits seeking to establish that service had been effected. No objection was taken by the appellant Mr Alan Bond to the receipt of that affidavit.

Service on Mr Bond of the order of 26 May 1997 was proved by the tendering of an affidavit from Craig Kenneth Bradley, a commercial agent in Perth, Western Australia. He deposed to the fact that he delivered to Gary Byron the orders of 26 May 1997 and 27 May 1997 and a copy of the Notice to Witness under the Service and Execution of Process Act 1992. Lastly he delivered to Mr Byron a letter from Messrs Fisher Jeffries dated 29 May 1997. That letter was in the following terms:

"We act for the Liquidator of SECL.

We enclose by way of personal service:

Order of the Supreme Court of South Australia made on 26 May 1997 requiring Alan Bond to attend for examination in Adelaide at 9.30am on Tuesday, 1 July 1997.

Order of the Supreme Court of South Australia made on 27 May 1997 for the production of Alan Bond at the Supreme Court of South Australia in Adelaide at 9.30am on 1 July 1997 pursuant to Section 39(1) of the Service and Execution of Process Act 1992.

Notice to Witness pursuant to Section 41 of the Service and Execution of Process Act 1992.

Copies of the documents referred to in paragraphs 1 to 3 above for service upon Alan Bond.

Section 40(5) of the Service and Execution of Process Act 1992 requires that you serve the documents referred to in paragraph 4 above on Alan Bond at Karnet Prison Farm as soon as practicable after receipt of this letter.

We will be grateful if you would confirm to us as soon as possible by facsimile that service of the copy papers has been effected upon Mr Bond.

The Liquidator is required to pay to you the costs of and incidental to the compliance with the Order including travelling expenses by Monday, 16 June 1997. Please let us know what these expenses will be so that we can make appropriate arrangements to effect payment. We will be pleased to make travel arrangements should this be of assistance.

Please contact Jason Karas of our office on 08 8233 0633 should you have any queries in respect of any aspect of the above."

On 1 June 1997, Mr Byron wrote to Messrs Fisher Jeffries advising them that on that day Mr Alan Bond was served with a witness summons pursuant to s41 of the Service and Execution of Process Act 1992 in the matter of Southern Equities Corporation Limited (In Liquidation).

Mr Karas exhibited an affidavit from Andrew Deans McClue, superintendent of Karnet Prison Farm, who deposed that on 1 June 1997 he personally served Mr Alan Bond with true copies of the orders of 26 May 1997 and 27 May 1997 and a copy of a Notice to Witness under the Service and Execution of Process Act 1992.

Mr Alan Bond did not seek to lead any evidence in opposition to the evidence adduced by the respondent.

On this appeal it was claimed by Mr Alan Bond that service had not been effected upon him of either the order of 24 April 1997 or the orders of 26 May 1997 in accordance with the provision of the Service and Execution of Process Act 1992. In those circumstances it was argued that he was under no obligation to attend the examination which had been set for 1 July 1997.

In a sense the argument raises a sterile point. By reason of the applications and the appeal to the Judge at first instance and these appeals, the date for the examination of Mr Bond has passed. It may be necessary in any event to either serve him and or his custodian again under the Service and Execution of Process Act 1992. The respondent argued, however, that as service has been effected the order made by the Master on 1 July 1997 adjourning the examination of Mr Bond until a date to be fixed will obviate the necessity to further formally serve Mr Alan Bond with the order for his examination. That would of course depend on the circumstances and whether or not Mr Bond is successful on this appeal and, of course, whether or not in due course he is represented at the time that an order is made, if it is made, for his examination.

The Examination Of Ms Caboche Of 2 June 1997

On 2 June 1997, Ms Caboche attended, as she was obliged to do by reason of the order of 24 April 1997, before the Master. Apparently no proceedings have been taken in respect of her failure to attend on 16 May 1997 and her failure to produce documents on that occasion and I need not address that matter further.

It is to be remembered that she had previously indicated, through her solicitors, that she would co-operate in the examination at least to the extent that she would attend on 2 June. Prior to 2 June there had been no indication on her part or the part of her advisers that she intended to make any application to set aside the order previously made for her examination. Indeed she had previously attended before the Master on 1 April 1996 and submitted herself for examination.

In any event on 2 June 1997 when the matter came before the Master Mr Andrew Harris, who appeared for Ms Caboche, advised the Master that an application would be issued later that morning. The Master received the application before its issue and the application sought relevantly the following orders:

That the within application be made specially returnable at the earliest time convenient to this Honourable Court to be returnable before Master Bowen Pain in Chambers on Monday 2nd June 1997 at 10.00 a.m.

That the orders made herein in the 24th day of April 1997 directing, inter alia, that Delores Jean Caboche attend to be examined pursuant to section 596B of the Corporations Law be set aside.

2A. That the orders made herein on 8th December 1995 as varied by orders made on 13th February 1996, 19th February 1996 and 18th March 1996 be set aside.

Further that the liquidator deliver to Delores Jean Caboche two copies of all and any affidavits filed herein of and relating to the said order.

Such further or other orders as this Honourable Court deems fit."

The application could not have been made any later nor with less notice to the liquidator. Indeed the application was so late that it had not been issued out of the Court, as it ought to have been. Moreover at the time the application was made to the Master the affidavit in support of the application was in draft form. The application was, of course, out of time in that it had not been brought within seven days as prescribed by r50 of the Supreme Court (Corporations) Rules 1993.

When asked why it was that the application was brought at that stage, Mr Harris told the Master:

"There are a number of reasons for that. One is the instructions to do it were received last night. And as a result of a conference taking place between Mr Cudmore and Ms Caboche, and Mr Fraser and me. So that’s the first thing. It relates to events which have occurred in the recent past and by recent I say the last few weeks. And we say they bear upon the propriety of this examination continuing.

One of those matters of significance relevant to the recent past is that the confidentiality order in relation to the Supreme Court action about which you’ve previously been informed lapsed on 30 May, last Friday.

Issues associated with the timing of the bringing of this application are touched on a Mr Cudmore’s affidavit."

I do not know what is meant by the significance of the confidentiality order. The confidentiality order did not prevent Ms Caboche giving instructions to her solicitors and barristers nor they advising her.

In response to that statement of counsel His Honour said:

"I will receive the application but I am not going to have this matter just held up by stalling tactics. I have already indicated to your instructing solicitors this morning, I consider that the situation with the confidentiality orders is just compounding whilst these matters are put off."

Before Mr Harris made his submissions to the Master, Mr Whitington drew to the Master’s attention that the application was out of time and did not comply with r50.

Thereupon Mr Harris made an oral application for an extension of time within which to bring the application. The Master did not rule upon that application.

The affidavit in support of the application was sworn by Mr James Cudmore, a partner in the firm of Ward and Partners, Solicitors for the appellant Ms Caboche. Mr Cudmore deposed that on 29 April 1997 Ms Caboche received a copy of the order of 24 April 1997 and on 5 May 1997 she was served with a copy of the statement of claim in the substantive proceedings and a letter from Messrs Fisher Jeffries informing her that the proceedings were by order of the Court to remain confidential until 30 May 1997.

The correspondence which had passed between Messrs Fisher Jeffries and Galbally Fraser & Rolfe of 5 May 1997 and 6 May 1997 was exhibited to his affidavit. He then stated that when Ms Caboche returned to Australia she returned to her home town of Perth and did not attend in South Australia until the evening of Sunday 1 June 1997. There was no other explanation for her failure to make an application to set aside this order at any earlier time.

After hearing argument the Master refused the application to set aside the examination summons. He also refused to adjourn the examination to allow Ms Caboche to appeal. He directed that the examination proceed on the basis the evidence be taken de bene esse. Accordingly, the examination of Ms Caboche proceeded before the Master.

Whilst that examination was proceeding, Mr Harris applied orally to Millhouse J, pursuant, he said, to r67.03 for a stay of the order made by the Master the same day. The application was made to Millhouse J to enable Ms Caboche to lodge a notice of appeal and prosecute an appeal against the Master’s refusal to adjourn the examination and set aside the order of 24 April 1997 and for an order to permit access by her and her lawyers to the affidavit material filed by the liquidator in support of the application for her examination. It was argued before Millhouse J that unless such an order was made it would render the appeal nugatory. After hearing the parties throughout the afternoon of 2 June 1997 His Honour refused the application at 4.36 pm. I assume that the Master rose at about the same time so that His Honour’s refusal of the application for a stay corresponded with the completion of the examination in any event.

Millhouse J did not give reasons for his refusal to grant a stay but it is clear enough from the way that the argument went and the decision that followed that he rejected the appellant’s argument that the refusal to grant a stay would render her appeal against the refusal by the Master to adjourn the proceedings and to set aside the examination summons nugatory. In that respect it could not be said that he was wrong. Indeed Ms Caboche has prosecuted an appeal from the Master to the learned Judge below and a further appeal from the learned Judge to this Court with vigour and without any suggestion that the matters raised on the appeal are sterile or that they have been rendered nugatory by reason of the continuation of the examination on 2 June 1997.

The examination of Ms Caboche on 2 June 1997 has not been included in the appeal papers. It is worth remarking that Ms Caboche has not relied upon that examination as she also failed to rely upon the previous examination, on 1 April 1996, to suggest that the examination itself shows an improper purpose which has motivated or actuated the liquidator in these proceedings. Again I think that to be a matter of some significance.

Ms Caboche Appeals

On 4 June 1997 Ms Caboche appealed from the order of the Master dismissing the appellant’s application of 2 June 1997.

No appeal was brought from the order of Millhouse J in respect of his refusal to grant a stay.

The notice of appeal was subsequently amended by leave of the Judge below on 4 July 1997 and I will return to the grounds of appeal in due course.

On 12 June 1997, the liquidator sought to have the Caboche appeal referred to the Full Court for hearing.

Mr Bond’s Application

On 6 June 1997 Mr Alan Bond made an application to the Court in the following form:

That this application be made specially returnable.

A declaration that service of a summons issued pursuant to an order made pursuant to Section 596B of the Corporations Law for Alan Bond to attend before this Honourable Court for examination has not been effected.

In the alternative, that the orders of Judge Bowen Pain made on 8 December 1995 and on 24 April 1996 by which he ordered pursuant to Section 596B of the Corporations Law that a summons issue requiring that Alan Bond attend before this Honourable Court for examination be discharged.

That the order of Judge Bowen Pain of 26 May 1997 varying his earlier order of 24 April 1997 and further ordering that the examination of Alan Bond take place at 9.30 am on Tuesday 1 July 1997 in Adelaide be set aside as an abuse of process.

That the order of Judge Bowen Pain of 27 May 1997 which purported to be made pursuant to Section 39(1) of the Service and Execution of Process Act 1992 (Cth) be set aside as beyond power.

That the order of Judge Bowen Pain of 27 May 1997 which purported to be made pursuant to Section 39(1) of the Service and Execution of Process Act 1992 (Cth) be set aside as an abuse of process.

That the date fixed by Maser Bowen Pain for the examination of Alan Bond on 1 July 1997 be vacated.

That the examination of Alan Bond be permanently stayed as an abuse of process.

That all affidavits filed in support of the liquidator’s applications for the issue of an order for the examination of Alan Bond pursuant to Section 596B of the Corporations Law be made available to Alan Bond and his legal advisers for inspection and copying."

Two comments may be made about the application. The first is that it was significantly out of time. The time to bring such an application expired in early May. The second is that the application does not directly assert that there has been a failure to serve Mr Bond with the orders of 24 April 1997, 26 May 1997 or 27 May 1997.

In due course the appeal by Ms Caboche and the application by Mr Bond were heard by the same Judge and it is from those decisions dismissing the appeal of Ms Caboche and the application of Mr Alan Bond that the appellants now appeal to this Court.

The Memorandum Of The Master Of 13 June 1997

Before dealing with the grounds of appeal to this Court there is one further factual matter which needs to be addressed.

On 13 June 1997, the Master sent a memorandum to the learned Judge to "bring you up to date with the activities on the various files". No complaint is made by either of the appellants about the fact of the communication. The Master wrote:

"I have also examined Delores Caboche, an accountant-type person employed by the Bond companies. As has been the pattern, applications were made at the last minute to set aside the orders for the examination."

It is said that the Master’s comments in relation to Ms Caboche are wrong and demonstrate actual bias on the part of the Master.

Whilst it is true to say that Ms Caboche had not previously made an application, the fact of the matter is that Ms Caboche could not have left her application of 2 June 1997 any later than she did. It is also the fact that in relation to other examinees including Mr Bond there were a number of very late applications. The behaviour of some of the examinees might be said to indicate a pattern.

The communication became the subject of some argument in this Court for another reason. The fact of the communication was disclosed by the learned Judge at a hearing on 25 June 1997.

That was a hearing of Mr Alan Bond’s application. His Honour said this:

"Can I just deal with the question of information which is in my possession? Can I hand you both this document? I will tell you what it is first, then I will invite you to read it as is. Apparently it is a memorandum to me from Master Bowen Pain, 13 June, written just prior to my return from annual leave. Master Bowen Pain has written it. As you are aware, he and I have been appointed by the court to deal with a range of matters, a range of Southern Equities. I have disclosed reports which touch upon issues. I have given you an extract of the memorandum of 13 July. I emphasize (sic) it is an extract. All that has been deleted is part of the memorandum relating to the action no. 1474/94."

Mr Andrew Harris appeared for Mr Bond on that occasion.

The learned Judge did not formally make the same disclosure in the appeal of Ms Caboche, for whom Mr Harris also appeared.

It was argued by Mr Harris that the learned Judge erred in failing to disclose to him in the matter of Ms Caboche that which the learned Judge had disclosed to him in the matter of Mr Bond.

The matter was raised as one of the grounds of appeal in Ms Caboche’s appeal however after the ground was argued by the appellant the ground was abandoned. The appellant, Ms Caboche, was right to abandon this ground of appeal because it was entirely without substance. Ms Caboche has reserved any rights she has in relation to the memorandum of 13 June 1997.

Extension Of Time

As can be seen Ms Caboche made an application on 2 June 1997 to extend the time within which to make the application and for the further orders to which I have referred. The learned Trial Judge concluded that the Master had not ruled upon the application for an extension of time. It is probable that the application was overlooked in the urgency of the application.

The learned Trial Judge dealt with a submission on behalf of Ms Caboche that he ought to exercise his discretion to grant her an extension of time within which to make the application.

He determined that it would have been appropriate for the Master to exercise his discretion and grant an extension of time within which to make the application and set aside the order. In so far as was necessary the learned Judge therefore allowed the appeal against an order (if one was made) refusing an extension of time.

I think it may be assumed, in those circumstances, that the procedural irregularity raised by the failure to bring the proceedings within the seven days prescribed by r50 of the Supreme Court (Corporations) Rules 1993 has been cured. The liquidator did not seek to argue, by way of alternative contention, that the learned Trial Judge was wrong in allowing Ms Caboche an extension of time within which to bring the application to set aside the examinations summons.

In those circumstances it is not necessary to further address Ms Caboche’s failure to bring her application within the time prescribed by the Rules.

Mr Bond’s application was also out of time. Therefore he also needed the Court’s indulgence for an extension of time within which to bring the application.

Mr Bond’s application for an extension of time fell to be decided by the learned Judge. [As previously stated Mr Bond’s application to set aside the Master’s order was heard by the learned Judge at the same time as he heard Ms Caboche’s appeal.]

The learned trial Judge found that no evidence had been adduced nor had any satisfactory reason had been advanced to explain the delay or to justify extending the time within which to make the application. In those circumstances he dismissed the application for an extension of time within which to bring the application to set aside the examinations summons.

The learned Judge’s failure to allow the appellant, Mr Bond an extension of time within which to bring the application was part of the subject matter of the appeal to this Court. If it cannot be said that the learned Judge was wrong about his decision refusing an extension of time to Mr Bond then that will determine this appeal.

There is no doubt that the Court has power to extend the time within which a person may make an application to set aside an examination summons. If the power is not contained within s1322(4)(d) of the Corporations Law then undoubtedly there is power under s48 of the Limitation of Actions Act.

Whichever Act is employed for the purpose of a consideration of an extension of time an applicant for such an order must satisfy the Court that the Court in its discretion ought to extend the time within which to bring proceedings. In this case the learned Trial Judge in the exercise of his discretion refused the application.

He said:

"Mr Bond has the benefit of advice from a team comprising senior and junior counsel and a solicitor. The summons and statement of claim in Action No.113 of 1996 had been served on 5 May, some seventeen days before the examination on 22 May. The order of summons for examination had been served on 29 April, twenty two days before the examination. There was sufficient time, if not ample, available in which to consider what, if any, objections would be made to the examination and to consider whether to seek to set the orders aside. No satisfactory reason has been advanced to explain the delay or to justify extending the time within which to make the application. The application is out of time and I do not extend the time within which to make it."

No challenge was made to any of the findings in the reasons to which I have referred, nor could there be.

There may be added to the facts which are relevant to this application the fact that on 22 May at Karnet Prison Farm a number of objections were taken to the examination proceeding and indeed the objections prevented the examination of Mr Bond going ahead on that day, but no objection was taken to the making of the order on 24 April 1997. None of the matters now sought to be agitated were raised at that time. The appellant has given no explanation as to why he took only the points advanced at Karnet Prison Farm. Particularly he has given no explanation for having failed to take the more fundamental points that the examination summons was obtained in circumstances where the liquidator was guilty of impropriety in failing to disclose material information or that the liquidator had obtained the examination summons for an improper purpose.

It seems to me that in circumstances where Mr Bond was represented by the team of lawyers to which His Honour has referred there can be no good reason why an application was not brought within the time prescribed by the rules. If there was a good reason it was certainly not advanced. The application was not made until 6 June 1997 and only in circumstances when the Master had made the further orders of 26 May and 27 May 1997.

In Re Excel Finance Corporation Ltd; Worthley v England (supra), the Full Court of the Federal Court confirmed that the Australian authorities had not followed the English authorities and had rather adopted a test as to whether the eligible applicant seeking the examination summons has the purpose of obtaining a forensic advantage not otherwise available.

The Court said at 89:

"For an abuse to be found it will be necessary that the offensive purpose be, at the least, the predominant purpose: see Burns Philp & Co Ltd v Murphy (supra) at 732 and Williams v Spautz (supra) at 529."

A liquidator or any other eligible applicant is not precluded from seeking an examination summons under s596B of the Corporations Law simply because the liquidator has caused proceedings to be brought against the person in relation to the same transaction, the subject of the proposed examination.

In Hugh J Roberts Pty Ltd [1970] 2 NSWR 582 Street J at 584:

"The mere fact that questions might be asked of an examinee directly involving a matter currently being litigated between the company or the liquidator and that examinee or a third party does not render those questions inadmissible, nor does it render the private examination itself an abuse of the processes of the Court. The liquidator is given by the statute this special authority to proceed by way of private examination to obtain information which he needs for the due winding-up of the company, the affairs of which he has the responsibility of administering. The mere fact that in obtaining that information he also obtains admissions or material that are available for him to use in evidence in current proceedings falls short of rendering the process abusive, vexatious or oppressive."

He said at 585:

"... it is immaterial in basic substance whether the private examination is sought to be used by a liquidator to gather information in connection with proceedings he believes he might be able to bring, proceedings he contemplates bringing, proceedings he has decided to bring, and proceedings he has already brought. There is no presently relevant distinction in substance between gathering information referable to commencing proceedings and gathering information referable to continuing proceedings."

See also Re Excel Finance Corporation Ltd; Worthley v England (supra) at 91.

In Hong Kong Bank of Australia & Ors v Murphy & Ors (1992) 28 NSWLR 512, in the Court of Appeal in New South Wales, Gleeson CJ said at 519:

"Whilst the court will not permit a liquidator, or other eligible person, to abuse its process by using an examination solely for the purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures, such as discovery or inspection, on the other hand, the possibility that a forensic advantage will be gained does not mean that the making of an order will not advance a purpose intended to be secured by the legislation."

In NZ Steel (Australia) Pty Ltd v Burton (1994) 13 ACSR 610 Hayne J said at 614:

"Thus the bare facts that there is other litigation to which the applicant for an order for examination and the proposed examinee are parties, and that the examination will touch on the matters the subject of that proceeding, does not mean that the examination is an abuse of process."

He said further at 618:

"In my view the mere fact that an applicant for examination may, by means of that examination, obtain admissions or materials that he cannot obtain by interlocutory processes in the current proceedings also falls short of rendering the process abusive, vexatious or oppressive."

It is clear enough from the authorities that the mere fact that proceedings are pending against the proposed examinee does not make the application for an examination an abuse of process. Nor will it be so even if the proposed examination touches upon or explores the subject matter of those existing proceedings. Still it will not be an abuse if the examination will give rise to a forensic advantage, for example by way of securing admissions or obtaining material or evidence not otherwise available to the liquidator.

It will be an abuse of process if the predominant purpose of the application for the examination summons is an improper purpose. The authorities have given instances of improper purpose, but they are not necessarily exhaustive.

The examination process will be used for an improper purpose when the examiner conducts a dress rehearsal of cross-examination or where the examination is sought for the purpose of destroying the credibility of the examinee or of witnesses who might be called for the examinee in the substantive proceedings. In addition, it is apparent that the section will be misused where an examination is conducted for the predominant purpose of obtaining a forensic advantage not available from ordinary pre-trial procedures or to simply cause undue inconvenience or embarrassment to the examinee or to inflict costs.

I do not think in this case that the examination order has been sought for an improper purpose. The liquidator commenced litigation against a number of parties seeking to impugn a transaction which, on the liquidator’s claim, has seen a wrongful disposal of assets by the actions of directors or executive officers of the corporation to the advantage of those directors and executive officers. In preparing his case in the substantive proceedings the liquidator is unlikely to receive any assistance from the directors or other officers of the corporation. Consequently he is entitled to use the examination process to gather as much information as possible about the transaction in order to assess the prospects of success of the claim and moreover for the purpose of obtaining and presenting evidence to the court to support the claim.

It might be that the examination process requires directors to give evidence contrary to their personal interests and defences in the substantive proceedings but that is not to the point. It is in the interests of both the corporation and the public that directors and executive officers remain accountable to that corporation whilst they hold office and become accountable to eligible applicants after winding up orders have been made.

There is nothing in the issue, the amendment or the maintenance of the substantive proceedings which allow the appellants to say that these examinations have been sought for an improper purpose.

Confidentiality And The Implied Undertaking

The fifth, sixth and seventh grounds can be dealt with together. I think, as I have said, they have been raised for the purpose of demonstrating an improper purpose on the part of the liquidator.

In essence the argument in relation to these three matters was that the examinations have been ordered to take place in private. The liquidator has used information arising from the examination of Ms Caboche and other examinees in some of the amendments which have been made to the statement of claim in Action No. 113 of 1996. In so doing the liquidator, it is said, has therefore published the information obtained in those examinations to BCPL.

Further it was argued that the liquidator was subject to an implied undertaking in respect of any documents produced during an examination and, in relation to the transcript created at the examination, not to use any of these documents for any purpose outside the examination. It was argued that the amendments to the statement of claim showed that the liquidator is in breach of that implied undertaking by using the documents and the transcript for the purpose of amending the statement of claim in Action No. 113 of 1996.

It is right that the order of 18 March 1996 for the examination of Ms Caboche on 1 April 1996 included an order that the examination be carried out in private. That order, however, does not have the effect of preventing the liquidator from using documents produced or information obtained during that examination in the examinations of other persons or, indeed, in the liquidation generally.

There may be any number of reasons why a liquidator might seek to have an examination conducted in private. The liquidator may wish to keep the very fact of the examination from other persons, or the liquidator may wish to keep private the topics upon which the examination is conducted to prevent publication to other persons who may be subject to further examinations. The liquidator may be of the view that publication of any information in relation to the fact of the examination or the examination itself may subvert his or her administration of the Corporation. A hearing will be held in private only if the Court considers that there are special circumstances which make it desirable to hold the examination in private. (s597(4))

An order made upon the application of a liquidator for an examination in private is made for the purpose of assisting the liquidator in the liquidator’s administration of the Corporation. It cannot be said that, because the liquidator seeks and obtains an order that the examination be held in private, that the liquidator is thereby prevented from communicating any of the documents or information obtained in that examination to any other person. That result would interfere with the liquidator’s administration of the Corporation rather than to assist it. Of course the liquidator could not use the information other than in the course of his or her administration of the corporation. To use the information otherwise would tend to suggest that the examination was conducted for an improper purpose.

In my opinion the order of 18 March 1996 and 24 April 1997 did not prevent the liquidator from publishing the contents of documents or information obtained in the examination to other persons for the purpose of the liquidator’s administration of the Corporation and in particular for the purpose of getting in the assets of SECL.

It follows, for reasons I have earlier expressed the liquidator was not prohibited from publishing information obtained in the examination to BCPL because such publication was in the best interests of SECL, the company subject to the liquidator’s administration.

However, the appellants argued that there was an implied undertaking which prevented the publication, by the liquidator, of any of the information except with leave of the Court. In support of that argument, the appellants relied upon the decision in The Duke Group Ltd v Pilmer (supra).

The learned trial Judge was also directed to that decision but declined to follow it. He said:

"I have carefully examined the decision in The Duke Group Ltd v Pilmer (supra). With respect, I am unable to agree with the conclusion that documents produced to a liquidator in the course of a s596 examination cannot be used in the absence of leave from the court or the person who produced them."

He went on to say:

"The effect of the rule as expressed in The Duke Group Ltd v Pilmer would require the liquidator, on each occasion he seeks to use a document, to obtain leave from the person who produced the document or from the court. If the person who has produced the document refuses to consent to its use, it would be necessary on every occasion to obtain the leave of the court, a requirement which would not only be onerous but expensive. It would increase the cost of the liquidation to the detriment of the creditors of the company."

He concluded:

"For these reasons, I do not think that, as a general rule, documents produced to a liquidator in the course of an examination are subject to the rule that they cannot be used in later proceedings without the leave of the court or the person who produced the document. The liquidator is at liberty to use the documents gained by him for the purpose of prosecuting an action or actions in the course of his administration of the liquidation."

The Duke Group Ltd v Pilmer & Ors is a decision of a single Judge of this Court.

In that case the plaintiff had in an earlier action (the first action) brought proceedings against a firm of accountants (the defendant) who itself joined another firm of accountants (the third party). Before the first action had been brought, the liquidator had obtained examination summonses and had examined various partners of the third party firm of accountants and a partner and employee of the defendant.

In the first action, both the defendant and third party made discovery of the documents which they had, through their partners or employee produced in the examinations. In due course a number of those documents were tendered in the trial of that first action. The documents which were produced in the examinations remained in the possession of the liquidator throughout the first action and afterwards. After the first action was compromised the plaintiff brought a second action against a third firm of accountants. The liquidator was advised that all of the documents tendered at the examination of the partners and employee of the defendant and third party in the first action should be discovered in the second action to the defendant in that second action. The liquidator also believed that the defendant in the second action should be entitled to inspect the documents and take copies.

The plaintiff applied, ex abundanti cautela, for leave to discover those documents in the second action. The plaintiff sought leave because it was contended that the plaintiff was bound by an implied undertaking as to confidentiality not to use the documents obtained in the examination for the purposes of other litigation.

The learned Judge discussed the implied undertaking and after referring to the speeches of Lord Diplock and Lord Scarman in Harman v Secretary of State for Home Department [1983] 1 AC 280, cited with approval the decision of the Full Court of the Federal Court in Sentry Corporation v Peat Marwick Mitchell & Co (1990) 24 FCR 463 where the Full Court of the Federal Court accepted that Northrop J, at first instance, had correctly stated the position in this country in the following terms:

"It is clear that according to Australian law a person who acquires a document pursuant to the processes of the court is under a duty not to disclose or make use of that document for purposes other than the court proceedings without the leave of the court or the person from whom the document has been obtained ... if knowledge is acquired from a document and use is made of that knowledge for purposes other than the case itself then that document and that knowledge has been used in contravention of the general principle."

His Honour then discussed whether there was an implied undertaking imposed on the liquidator with respect to documents produced to the Court in the course of an examination conducted pursuant to an examination summons.

He referred to s541 of the Companies (South Australia) Code, which was the section under which the application was brought, and concluded that:

"...the implied undertaking exists wherever the coercive power of the court has been employed to enable a person to obtain the documents of another. The nature of the coercive power is of no significance. So, I take the view that the undertaking was imposed when the liquidator and his legal advisers came into possession of the documents which were compelled to be produced to the court pursuant to s541."

His Honour then went on to consider whether the liquidator or his legal advisers would be in breach of the undertaking and therefore in contempt if the documents were discovered to the defendants in the second action and inspection was permitted. His Honour observed that the implied undertaking is not to use the documents for a collateral or an ulterior purpose.

He said:

"The use of the documents for the purpose of getting in and realising the assets of the plaintiff in the liquidation or winding up process could hardly be described as a collateral or ulterior purpose."

He then relied upon Grocon Ltd v Alucraft Pty Ltd (In Liq) (1992) 10 ACLC 1127 and Spedley Securities Ltd (In Liq) v Bank of New Zealand (1991) 26 NSWLR 711 and concluded that whilst the liquidator was subject to an implied undertaking, discovery to the defendants and permitting the defendants to inspect the documents was not a breach of that undertaking, because the documents were being used in the liquidation.

He said:

"This conclusion accords with the reasoning of Byrne J in Grocon Ltd v Alucraft Pty Ltd (In liq) (1992) 10 ACLC 1,127 and Cole J in Spedley Securities Ltd (In liq) v Bank of New Zealand (1991) 26 NSWLR 711. In Grocon the liquidator had disclosed to a creditor documents obtained in the discovery process so that the creditor could make an informed decision as to whether to fund the litigation. Byrne J appears to have accepted that there was an implied undertaking but held that the documents had not been used for an ulterior or collateral use. He went on to say (at 1,129):

‘In principle, it is perfectly proper for a liquidator to use discovered material in the discharge of the statutory function of determining whether to proceed with litigation in which the company is engaged at the commencement of the winding-up: see Corporations Law, s 477(2). This is a decision which the liquidator must make based on legal advice from his own lawyers and perhaps in consultation with creditors.

In my opinion, it is proper also for the liquidator to seek funding from a creditor and for that purpose to provide to the legal advisers of the creditor such material as is necessary for them to advise their client. Such conduct is consistent with the proper conduct of the litigation and, indeed, of the liquidation.’
In Spedley’s case (supra) Cole J said (at 728):

‘My view is that a liquidator is entitled to use information, documents and statements for the purpose of subsequent proceedings in the winding-up where the information or documents are obtained pursuant to s 541. Were it otherwise, the public purpose for which s 541 is enacted may be stultified.’

Consequently, in my view, whilst the undertaking was imposed upon the liquidator and the plaintiff’s solicitor and counsel, discovery to the defendants and permitting them to inspect the documents is not a breach of the undertaking.

Also, it follows that the plaintiff and its legal representatives would not be in breach of the undertaking upon tendering any of the documents at the trial of this action."

The learned Judge in this matter declined to follow Duke Group Ltd v Pilmer (supra) because he said that documents produced to a liquidator are not subject to the rule that they cannot be used in later proceedings without leave. I think, with respect that is not the proposition for which Duke Group Ltd v Pilmer (supra) stands. I think Duke Group Ltd v Pilmer (supra) is authority for the following propositions. First that an undertaking is imposed upon a liquidator with respect to documents produced to the Court in response to an examination summons. Secondly the undertaking is not to use the documents for a collateral or ulterior purpose. Thirdly, the use of the documents in the liquidation is not a collateral or ulterior purpose.

So it follows that a liquidator would be free to use the documents produced in an examination in another examination in the same liquidation without leave of the Court or leave of the person producing the documents. Moreover, the liquidator would also be free to use those documents or the evidence obtained in the examination in getting in the assets in the liquidation.

A chose in action against directors and officers or third parties is part of the process of getting in the assets in the liquidation. Therefore in any action brought by the liquidator or by the corporation at the instigation of the liquidator, the liquidator would be entitled to use any documents produced in answer to an examination summons or transcript of an examination without being required to obtain leave of the Court or any other party. Whilst the liquidator might be subject to an implied undertaking not to use documents for a collateral or ulterior purpose the use of the documents or transcript bona fide in the liquidation in the circumstances described would not be in breach of that implied undertaking. So understood the decision in Duke Group Ltd v Pilmer (supra) is, in my respectful opinion, correct.

It follows therefore that there is no support for the appellant’s argument in the decision of Duke Group Ltd v Pilmer & Ors and in those circumstances the appellants claim that there has been a breach of the implied undertaking, which is evidence of the improper purpose, must be rejected.

Inspection of the Affidavits

I have reached the conclusion that the appellants do not have an arguable case in respect of their claim that there was non disclosure or that the liquidator was motivated by an improper purpose.

In those circumstances, they are not entitled to access to the affidavit supporting the application of 7 December 1995 or any other further affidavits which have been sealed up in support of any of the applications made. It would be inappropriate to exercise a discretion in favour of the appellants because the appellants have not been able to demonstrate that they have an arguable case and more particularly that the affidavit material is relevant to that arguable case.

Service of the Orders of 24 April 1997

I have already set out the operative parts of the order of 24 April 1997.

It is claimed that the order is not a subpoena within the meaning of the Service and Execution of Process Act 1992. It is further claimed that it was not served upon Mr Bond.

The point is entirely without merit. Mr Bond did appear in answer to the order. He was represented on 22 May 1997 at the Karnet Prison Farm by senior and junior counsel both of whom represented him again on this appeal. His counsel took no point on the question of service of the order. Not only was the point not taken at Karnet Prison Farm but indeed senior counsel advised Heenan J, in the application made to him, that Mr Bond had been served on 29 April 1997 and had provided the order to his solicitors on 1 May 1997.

It was not until further orders were made on 26 May and 27 May 1997 that it was claimed by Mr Bond that service of the order of 24 April 1997 had not been effected upon him in accordance with the Service and Execution of Process Act 1992.

Not only was Mr Bond served on 29 April 1997, on 28 April 1997 Mr Deans McClue, superintendent of Karnet Prison Farm, was also served with a copy of the order of 24 April 1997. That he received the document cannot be doubted because of a reply, to which I have already referred, from the Ministry of Justice to Messrs Fisher Jeffries of 30 April 1997, acknowledging receipt of the facsimile letter of 28 April 1997 addressed to the superintendent of Karnet Prison Farm.

There is no doubt, in my opinion, that both the superintendent of the prison and Mr Bond were respectively served on 28 April 1997 and 29 April 1997.
The Service and Execution of Process Act provides in Pt3 for the service of subpoenas. In particular Div2 of Pt3 provides for the service of subpoenas addressed to persons in prison.

It is said that the service does not comply with the Service and Execution of Process Act 1992 because the order of 24 April 1997 is not a subpoena and therefore could not have been served in accordance with the Commonwealth Act.

I think the order made is a subpoena within the meaning of subpoena as defined in s3 of the Service and Execution of Process Act 1992. Subpoena is defined in that Act:

" ‘subpoena’, except in Part 4, means a process that requires a person to do one or both of the following:

(a)     to give oral evidence before a court, authority or person;
(b)     to produce a document or thing to a court, authority or person;
        but does not include a process that requires a person to produce a document in connection with discovery and inspection of documents."

I think the order of 27 April 1997 is a process that requires a person to give oral evidence before a court and, therefore the examination summons does qualify as a subpoena under the Act.

Division 2 of Pt3 applies in circumstances where a person is a prisoner in a prison in a State other than in the State where the subpoena issued.

If an order is made addressed to the custodian of the prisoner for the production of a prisoner then that order and the subpoena must be served upon the custodian of the prison together with a copy of both the order and the subpoena for service on the prisoner (s40).

The custodian of the prisoner is defined in s3 of the Act:

"Custodian, in relation to a person in prison means the officer in charge of the institution or place at which the person is detained."

Section 41 provides:

"Service of the subpoena is effective only if copies of such notices as are prescribed are attached to the subpoena, or copy of the subpoena, served."

It is right to say that service was not effected in accordance with the Act. Whilst I have found that both Mr Bond and Mr McClue were served on 28 and 29 April 1997, service was not in accordance with the Service and Execution of Process Act because the notice required under s41 of the Act was not attached to the subpoena. In those circumstances it could not be said that service of the subpoena was effective under the Service and Execution of Process Act. To that extent I agree with the argument advanced by Mr Bond.

However I still think the order of 24 April 1997 was served. The order of 24 April 1997 provided that the applicant was entitled to serve the order out of the jurisdiction.

A subpoena may be served, other than in accordance with the provisions in Div2 of Pt3 of the Service and Execution of Process Act.

Section 8(3) of the Service and Execution of Process Act provides:

"This Act does not affect the operation of a law of a State so far as the law provides for service of a subpoena on a person:

(a) only after permission or leave has been given; or
(b) only if it is served not less than a specified number of days, being greater than 14 days, before the date for compliance with the subpoena".

Leave was given by the Master and it was served more than 14 days before the date for compliance with the subpoena. In my opinion there has been effective service of the order of 24 April 1997.

The service was defective in one respect however. Because the order had not been served in compliance with the Service and Execution of Process Act, and in particular in compliance with Div2 of Pt3 of that Act, the respondent was not entitled to claim that Mr Bond had to attend before the examination on 22 May 1997 without first obtaining an order under the Prisons Act (WA). However that is now only of historical interest and need not be further examined.

All that need be determined and I determine it in favour of the respondent, is that there was effective service of the examination summons on the appellant Mr Bond.

It is also claimed that Mr Bond was not served with the orders of 26 and 27 May 1997.

Again, it is submitted that the order of 26 May 1997 is not a subpoena under the Service and Execution of Process Act. I have already set out the relevant paragraphs of that order.

It can be seen that the order deleted par5 of the order of 24 April 1997, which provided that the Supreme Court of South Australia sit outside the State and in Western Australia for the purpose of hearing the examination of Mr Bond. It provided that Mr Bond was required to attend before the Supreme Court in this State for further examination.

In my opinion par2 of the order of 26 May 1997 is a process that requires a person to give oral evidence before a court and is therefore a subpoena within the definition of a subpoena under the Service and Execution of Process Act. The order was therefore capable of being served as a subpoena under that Act.

Reference has previously been made to the order of 27 May 1997.

The order of 27 May 1997 is an order for production within the meaning of s39 of the Service and Execution of Process Act.

To effect service of the orders of 26 May and 27 May 1997 upon Mr Bond in accordance with the Service and Execution of Process Act it was necessary to serve both orders on the custodian of Mr Bond, together with copies of that order on Mr Bond himself. It was also necessary to comply with s41 of the Act and provide copies of the prescribed notices under the Service and Execution of Process Act and attaching them to the order or subpoena.

The order of 27 May 1997 provided for service on Mr Gary Byron in his capacity as custodian of Mr Alan Bond. Mr Byron, who was the Chief Executive Officer of the Ministry of Justice, was served with the orders of 26 May and 27 May 1997 on 30 May 1997, and he was served with a Notice to Witness under the Service and Execution of Process Act in compliance with s41 of the Act.

He was also served with copies of each of the documents for delivery by Mr Byron to Mr Bond in accordance with s40 of the Act.

Mr Byron then transmitted those orders to Mr McClue, the superintendent of Karnet Prison, who has deposed in an affidavit to having received those documents and serving them on Alan Bond on 1 June 1997.

In these circumstances it does not matter whether Mr Byron or Mr McClue were the custodian of Mr Bond, because both have been served in accordance with the Service and Execution of Process Act.

There is no doubt that the order for examination of Mr Bond on 1 July 1997, being the order of 26 May 1997, and the order of 27 May 1997 for his production were served on Mr Bond in accordance with the Service and Execution of Process Act, and Mr Bond was obliged to attend for examination on 1 July 1997, or upon the adjourned examination.

I therefore reject the arguments of the appellant Mr Bond that there has not been good service of the orders of 24 April 1997, 26 May 1997 and 27 May 1997.

Conclusion

In all of those circumstances all of the arguments advanced by both appellants should be rejected. It follows that both appellants’ appeals must be dismissed.

It would be appropriate, to prevent further delay, for this Court to set a further date before the Master for the hearing of the examination of Mr Bond and of Ms Caboche if the liquidator seeks a further examination of her. I suggest that the parties be heard as to when the examination of Mr Bond and the further examination of Ms Caboche take place.

Cox J

I would dismiss these appeals. I agree with the reasons of Lander J.

Bleby J

I agree, for the reasons given by Lander J, that these appeals should be dismissed. I also agree that the parties should be heard as to when the examination of Mr Bond and the further examination of Ms Caboche take place, so that if requested to do so, this Court may set a further date for the hearings.

[1997] SASC 6399

23 October 1997